Shipping companies enable the transport of raw materials and finished products across oceans and borders. The global marine vessel industry is set to expand over the coming years to reach a market value of $188.57 billion by 2028. Though the industry faces high fuel costs and port congestion, shipping stocks remain resilient. They offer significant potential returns as the world economy rebounds from recent challenges. In this article, we’ll look at the top three shipping stocks to watch in 2024.
FedEx Corporation (FDX)
The first shipping stock on our list is one of the most famous companies we know today, FedEx Corporation (NYSE:FDX). Fedex is was founded in 1971 and headquartered in Memphis, Tennessee, with a market capitalization of more than $61 billion. FedEx operates business segments focused on express transportation, ground delivery, freight transportation and support services. Through these segments, FedEx provides services, including express shipping, small-package ground shipping, and more, to customers in the States and internationally.
Last month, FedEx reported $1.28 billion in operating income, up 8.47% YoY and a 5.8% operating margin. Net income rose 13.92% to $900 million. The company’s DRIVE transformation program is also expected to reduce costs by $1.8 billion. Unfortunately, this quarter’s EPS missed estimates by 3.62%, but analysts don’t appear overly concerned. FDX maintains a “Strong Buy” analyst rating with a high target of $360, representing greater than 40% potential upside.
Eagle Bulk Shipping (EGLE)
The next shipping stock is a fully integrated shipowner and operator, Eagle Bulk Shipping Inc. (NYSE:EGLE). The company has an enterprise value exceeding $950 million and focuses on operating Supramax and Ultramax dry bulk cargo vessels. As of late, Eagle Bulk Shipping owns a fleet of approximately 52 vessels representing 3.2 million deadweight tons and additional Ultramax vessels when needed. Finally, Eagle Bulk Shipping performs in-house strategic, commercial, operational, technical, and administrative shipping management functions.
Star Bulk Carriers Corp. and Eagle Bulk Shipping Inc. have recently agreed to merge in an all-stock deal. The combined company would create a large, dry bulk shipping company. The merger aims to build a diverse fleet that includes vessels equipped with emissions-reducing scrubbers. The companies expect the deal to take advantage of operational efficiencies and increased revenue opportunities.
During the third quarter of 2023, Eagle Bulk Shipping generated TCE revenues of $54.1 million and adjusted EBITDA of $15.6 million. The quarter ended with a net income loss, which analysts expected, but earnings per share still exceeded predictions by 65.56%. Analysts also maintain a “Strong Buy” rating with a high target of $60, representing more than 7% upside potential from its current levels.
Golden Ocean Group (GOGL)
The last shipping stock on our list is an international dry bulk shipping company based in Bermuda, Golden Ocean Group Limited (NASDAQ:GOGL). The company transports bulk commodities worldwide, including ores, coal, grains and fertilizers. Golden Ocean Group owns a fleet of Newcastlemax, Capesize, Panamax, and Ultramax vessels. As of late, the fleet comprises 95 bulk vessels which is equivalent to about 27.5 million DWT. Moreover, the company has chartered 11 vessels, with six operated on fixed-rate time charters, 31 on index-linked-rate time charters, and the remaining 55 active in the spot market.
Golden Ocean Group reported solid financial results in the third quarter, generating a net income of $28.7 million and an EPS of $0.14. Adjusted EBITDA also remained healthy at $78.9 million. Golden Ocean operated its fleet of Capesize and Panamax vessels at average daily rates of $18,173 and $15,389, respectively.
Recently, Golden Ocean declared a dividend of $0.10 per share for Q3’23, representing an annual dividend yield of 3.9%. Analysts rate the stock as a “Strong Buy” with a high target of $11.50, citing an more than 9% upside potential for new investors. The potential upside and the dividend make it one of the most attractive shipping stocks to buy right now.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
